By Steve Dinnen
The nation’s GDP grew at a respectable 3% in the second quarter of 2025. That was a good lift from the anemic 0.5% growth rate during the first quarter.
Iowa results are not yet available, but first-quarter numbers show the state is lagging behind the national average. Iowa’s other economic data is weak as well, showing the state has challenges.
In the first three months of 2025, the Bureau of Economic Analysis showed Iowa’s real Gross Domestic Product decreasing by 6.1%. That’s a massive decline. At a national level, that hasn’t occurred since the Great Depression. Another poor number for Iowa is average hourly earnings, reported by the Bureau of Labor Statistics. The latest calculation of $30.37 is the lowest among all of Iowa’s surrounding states and lower than any state outside of the Deep South and New Mexico.
Peter Orazem (pictured), who teaches economics at Iowa State University and directs its Program for the Study of Midwest Markets and Entrepreneurship, believes the GDP numbers spell bad news for Iowa.
“By national standards, Iowa is in a recession,” he said. In fact, he added, the state has been underperforming relative to the nation for the last seven years.
Weakness in the agriculture sector is a big factor for the relatively poor statistics. Agriculture and related industries account for around 20% of Iowa’s total economic output. Iowa is a leading producer of a number of agricultural products, notably corn, soybeans and hogs. With such outsized production, any dip in prices ripples through the whole state.
Ernie Goss, a professor of economics at Creighton University, estimated the break-even price of a bushel of corn at $4.80. The latest spot price of corn was $3.77. Multiply that $1.03 per-bushel shortfall times this year’s anticipated 2.63 billion bushels across the state, and you can envision trouble come harvest time.
Agriculture also affects Iowa manufacturing, with companies such as John Deere, Kinze Manufacturing and two tire plants in Des Moines devoting their entire output to farm equipment. Food processing, be it meat or dairy or pasta, likewise is tied to the farm.
But it’s not all gloomy. At some point, commodity prices will rise. Farmers are trying to lower input costs to await that day. Manufacturing will flow after it ebbs. Insurers are devising new products to gain market share. And, with any luck, employers will boost wages as workers increase their productivity.
So everyone has a hand in this. Everyone has a role in Iowa’s growth, now and in the future.
